Three Hurdles for the US' TikTok Divestment-or-Ban
Three Hurdles for the US' TikTok Divestment-or-Ban
The US' TikTok divestment-or-ban law faces three major unknowns.
President Biden signed a law on April 24 that gives Chinese tech firm ByteDance up to 360 days to sell TikTok to a US owner or face a ban in the United States.
Despite all the hype, the law faces at least three major unknowns — and here’s what to know if you’re a tech policy analyst, technology company, investor, policymaker, or anyone else watching the TikTok saga. Brought to you by Global Cyber Strategies, a Washington, DC-based research and advisory firm.
The One-Liner
The path forward for TikTok is uncertain, with at least three major unknowns for the law and the company: constitutional challenges, presidential election politics, and the Chinese government’s reaction.
Three Hurdles for the TikTok Law
This is a major moment for US technology policy, US-China relations, and the global internet. I wrote recently in Barron’s about the uncertainties and what companies, policymakers, and other observers should take away about the technology, policy, and geopolitical dimensions of the TikTok law. First are lawsuits:
The first bucket of unknowns is lawsuits over First Amendment and bill-of-attainder concerns. Free speech law is relevant because, after all, TikTok is a content platform used by 170 million Americans to share videos. TikTok and ByteDance’s new lawsuit claim that the law infringes on the free-speech rights of its users (and the companies themselves). ByteDance and TikTok likely won’t stand alone in making these challenges. The American Civil Liberties Union and other civil society groups have blasted the measure as unconstitutional under the First Amendment.
Second are the politics:
Second on the unknown list is the presidential election. The politics of a TikTok divestment-or-ban are somewhat bizarre. Former President Trump tried repeatedly to ban TikTok while in office, but candidate Trump started opposing a ban in March of this year. President Biden has long voiced concerns about TikTok, withdrew Trump’s executive order on TikTok shortly after coming into office, and has now signed the new congressional divestment-or-ban bill into law. And even though Biden signed the law, his presidential campaign uses TikTok to spread its message. The Trump campaign does not, despite Trump now supporting TikTok staying in the country.
The public polling on a government-compelled TikTok divestment or ban, as laid out in the Barron’s article, is even more interesting.
And don’t forget that Beijing gets a vote, too — a reminder that any company engaged in these kinds of technological or investment activities needs to understand the geopolitical tensions, relationships, and risks at play.
Last but certainly not least, much of the media discussion focuses on U.S. law and policy. But Beijing gets a vote, too. In 2023, the Chinese government said it would “firmly oppose” any forced sale of TikTok and made clear it would block any such attempt on the ByteDance side. It’s unknown whether Beijing would approve a sale of ByteDance given the new U.S. law. The TikTok lawsuit says China will never let ByteDance export the algorithm that powers TikTok. Perhaps Chinese officials will see the writing on the wall and prioritize avoiding the potential financial loss to ByteDance.
But:
It’s equally possible the Chinese government sees a huge propaganda and geopolitical opportunity. Beijing could say that the U.S. complains endlessly about “unfair market barriers” and “censorship” in China (to be clear, both are real problems) while whipping out the national security hammer the minute a Chinese tech company finds success in America. Such a narrative could seek to portray Washington as hypocritical while apparently validating Beijing’s push for “cyber sovereignty” and the need for state restrictions on the internet everywhere.
Watch these three unknowns in the coming months.
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